A couple of years ago I bought a beautiful home in Lexington, Kentucky. About six months ago I lost my job and stopped making my mortgage payments. Since then I found another job, but it doesn’t pay as much and I haven’t been able to catch up on the past-due amounts. The house is about to go into foreclosure. I want to keep my house and think I might be able to get a loan from my grandparents to help me out. Can I buy my foreclosed home back from the bank if I can come up with the money?
Maybe. In Kentucky, you get six months to repurchase or “redeem” your home after losing it to foreclosure if the home does not sell for a certain amount at the foreclosure sale. (This is explained in more detail below.)
Foreclosures in Kentucky are judicial, which means the lender files a lawsuit in court to foreclose your home. Once the lender gets a judgment for foreclosure from the judge, the home can be sold at a foreclosure sale. Prior to the sale, there must be an appraisal of the property.
If the house sells for less than two-thirds of its appraised value at the foreclosure sale, you get six months to redeem the home (Ky. Rev. Stat. § 426.530(1)). Once this redemption period expires, you won’t get another opportunity to get your house back. (Learn more general information about the right of redemption.)
In order to redeem, you must pay the purchase price that the winning bidder at the auction paid plus 10% per annum interest and certain costs to the clerk of the court (Ky. Rev. Stat. § 426.530(1)). Once you make the payment, you’ll get the property back (Ky. Rev. Stat. § 426.530(2)).
Rather than counting on redeeming the home, it might make more sense to take any money you come up with and reinstate the loan by catching up on past-due payments. Or you could pursue other options if you want to keep your house. For example, you might be able to arrange an alternative to foreclosure, such as a mortgage modification, forbearance agreement, or repayment plan.
In Kentucky, the foreclosure procedure will take at least several months, but you should be sure to explore alternatives to foreclosure early in the process to ensure that you have sufficient time to work out a deal. (To learn more about foreclosure laws and procedures in Kentucky, visit Nolo’s Kentucky Foreclosure Law Center.)
If you want to locate the statute that discusses your right to redeem the home after a foreclosure sale in Kentucky, go to Chapter 426 of the Kentucky Revised Statutes.